The CARES (Coronavirus Aid, Relief and Economic Security) Act provides a one-time Stimulus Payment to Americans, including expats, based on certain criteria. The payment is intended to help those whose incomes have been affected by the Coronavirus outbreak and the measures implemented by governments to limit its spread.
In this article we look at how being married to a foreign spouse affects expats’ entitlement to receive a Stimulus Payment.
CARES Act Stimulus Payments
The CARES Act was passed on March 27th 2020 to provide financial relief to American businesses and individual taxpayers.
The Stimulus Payments are worth a maximum of $1,200 per individual who earns up to $75,000, with the amount gradually phasing out up to a maximum income of $99,000. These figures all double for Americans who are married and file jointly (although caveats may apply for those Americans married to a foreigner – read on for more details on this).
Expats with dependent children under the age of 17 receive an additional $500 per child, if the children have US social security numbers.
The IRS uses Americans’ adjusted gross income as reported on their 2019 tax return, or, if they haven’t filed one yet, their 2018 tax return.
The Stimulus Payments are paid automatically by direct deposit into a US bank account if one was provided on their most recent tax return. Otherwise, expats can provide their US bank details using the IRS Get My Payment tool, or if they don’t have a US bank account, they will be mailed a check.
“When spouses file jointly, both spouses must have valid SSNs to receive a Payment with one exception,if either spouse is a member of the U.S. Armed Forces at any time during the taxable year.” – The IRS
Stimulus Payments aren’t considered taxable income by the IRS, though they may be by foreign countries.
Expats married to a foreign spouse filing status
Expats married to a foreign spouse (who isn’t a US taxpayer) can choose to file jointly or separately. Most choose to file separately, as this keeps their spouse outside of the US tax system, which will otherwise involve reporting all of their worldwide income and assets, and potentially paying US tax.
There are certain circumstances when it can be beneficial to file married jointly to a non-US taxpayer foreign spouse, but there are rare.
Stimulus Payments for expats with a foreign spouse
The CARES Act contains some important details concerning Americans who are married to foreigners, and how their spouse and filing status affect their entitlement to a Stimulus Payment. For married Americans, Stimulus Payment eligibility is best summarized as follows:
– An American citizen or green card holder whose spouse has a US social security number but who file separately – each can receive a Stimulus Payment if each of their income is under $99,000.
– An American citizen or green card holder whose spouse has a US social security number and who file jointly – if their joint income is under $198,000, they will receive a double Stimulus Payment.
– An American citizen or green card holder whose spouse has no US social security number and who file separately – the American citizen or green card holder will receive a single Stimulus Payment if their income is under $99,000.
– An American citizen or green card holder whose spouse has no US social security number and who file jointly using a taxpayer ID number (also known as an ITIN) – neither can receive a Stimulus Payment.
The only exception relating to the last group is for expats who serve in the US military, though there are currently some legal challenges in motion to allow expats married to and filing jointly with a foreigner with no US social security number to also receive a stimulus payment.
Filing abroad is more complex than filing from the US, and expats almost always benefit from advice from a US expat tax specialist, to ensure that they’re filing to their maximum benefit.
Expats who haven’t filed a 2018 tax return and who want to receive a Stimulus Payment should ensure that they catch up using an IRS amnesty program such as the Streamlined Procedure before October 15th.